For all their attention to cost reduction and restructuring, many companies are only now discovering a puzzling exception to the laws of economic gravity: capital programs keep going up, but show no sign of ever coming down. Despite top-level decrees and well-defined budgeting processes, the appetite for non-discretionary capital inexorably continues to grow. This should not, however, be surprising. Although senior managers can approve broad spending outlines and review major projects, they are powerless to drive out capital "from the top": real decision making gets done at the grassroots level. That is where the concrete opportunities lurk to make substantial, sustainable cuts in capital spending. And that is where they often remain hidden—unless and until managers come to view their company’s whole capital program not as an addiction to be fed, but as a rich vein of untapped value to be mined.

Capital planning and budgeting processes rarely focus on uncovering new ways to deploy assets as efficiently as possible

Let’s start with an uncomfortable fact: capital planning and budgeting processes rarely focus on uncovering new ways to deploy assets as efficiently as possible. Nor do they address the root causes of higher than necessary levels of capital spending:...